Residential sales 'likely to fall 26% this year'
Residential property sales are expected to drop by 26.6 per cent this year to Bt220 billion, from last year's Bt300 billion, according to Plus Property Partners Co Ltd.
Although aggregate sales are expected to drop, the volume of 70,000 units last year should remain the same.
Homebuyers are purchasing less expensive homes.
Instead of seeking homes between Bt5 million and Bt10 million, buyers are now looking at homes priced between Bt2 million and Bt7 million said Kantitat Moltha, the company's head of research and development.
Continuing negative economic factors such as the economic slowdown, the high cost of living, increasing oil prices and high interest rate have reduced demand for new homes.
The researchers concluded that demand for new properties would fall between 5 and 30 per cent in the first quarter of this year, depending on the price range.
For instance, in the first quarter of the year there were 3,690 new condominiums units launched, an increase of 84 per cent from 2,000 units in the same period last year.
However, demand for condominiums dropped by an estimated 5 per cent over the same period in 2005.
Sales of detached homes in property projects are also expected to decrease by 12 per cent and town-houses 30 per cent in the first quarter year on year.
To maintain sales momentum, most property developers will have to change their customer targets from the upper to middle markets, downsize their new projects and offer residential unit prices between Bt2 million and Bt5 million, rather than the present range from Bt5 million upwards, said Mayta Chanchamcharat, Plus Property Partners managing director.
To make the most of a shrinking market, the location of new property projects will shift to areas served by mass transit or prime sites close to expressways or ring roads, he said.
Kantitat said the company's research highlighted Sukhumvit, Phaholyothin and Phya Thai roads as prime locations for new condominium projects. Other places, including Ratchadaphisek, Lat Phrao and Rama III roads, have existing condominium projects with units that are still unsold from last year.
Meanwhile, demand for detached homes and town-houses is showing strong growth in northern and eastern parts of Bangkok, including Rangsit, Bang Na-Trat road, Sukhumvit and Onnuj, he said.